Although our collective economic woes continue to be the topic of much discussion and dismay, HealthFocus International of St. Petersburg, FL, recently published an interesting study that quantified consumer attitudes and shopping habits. The results confirmed that although brand loyalty as it relates to the cost of goods is largely up for grabs, there is still a long term interest in "healthy" foods.

For the study, titled "Grocery Buying in the Current Economy," 300 primary grocery shoppers were surveyed with the intent of looking at household changes in the last six months (shoppers that have been unemployed for longer than six months were intentionally excluded from the sample as were retirees that are not employed). Seventy-five percent of the shoppers were women. Half of the households in the study were dependent on one income and 42% had dual incomes, while the remainder had multiple incomes.

The results showed that 35% of the shoppers in the study had experienced household income reductions over the last six months and 20% of them were severe reductions. The number was actually closer to 40% of shoppers in the 18-39 range and the 55-64 range. Because those 65+ have been affected less, the total percentage appears closer to 35% than 40%. And of the 300 shoppers sampled, 86% of them were either extremely or somewhat nervous about the economy.

Barbara Katz, president of HealthFocus International, explained that the report revealed an interesting and evolving consumer mindset. In the quest to save money, consumers are buying more staple foods like potatoes in an effort to not eat out at restaurants as much. They're also cutting more coupons and shopping with more discipline, using lists and shopping schedules that usually correspond to pay days. Further, she said, consumers aren't shopping at club stores as often. "The Wall Street Journal backed up what we found: people don't have the money to be buying more at one time. People are buying more on sale, not buying more at once."

Organics: Cents and Sensibility

The value proposition of organic offerings has always been the center of debate, and now it is even more so because the core consumer is also the subgroup that's been hit the hardest economically.

"The biggest issue with organics is that the group most interested in the value proposition-18 to 29-year-olds-has trouble affording it," said. Ms. Katz. "They're also the biggest group that says they're cutting back on organic.

"The trend in organics has been that the interest has always been the same, but the willingness to pay for organic, that's where the 18-29-year-olds really split out," she continued. "When you look at this in context with the hopefully short-term economic bubble that we're in, it's overshadowing their willingness to buy, whether they have the money or they don't. For the people that have had income reductions in our study, 36% said they're buying less organic."

The report also showed that foods with functional ingredients continue to enjoy a following, however some shoppers need "additional persuasion in a tighter economy." The study also said that "Although 37% say that they would never pay more for foods or beverages with added ingredients, a total of 31% of the shoppers are still open to foods with added ingredients or will continue to purchase these products because the benefit is important to them. Another third would pay more, but they now need to be more convinced that a benefit exists. Interestingly, this sentiment does not change much across demographic breaks."

But a fascinating facet of the study proved to be the attitudinal shift of consumers who could no longer pay for "green" or organic products. Ms. Katz said she expected consumers to lower their attitudes towards social responsibility, but the result was opposite of the expectation. "On the behaviors where it wasn't costing anything-like recycling-we only had about 5% say they were doing less recycling," she said. "It seemed like the people who were faced with a severe downturn in income were more likely to be increasing their recycling efforts than the total population. These shoppers were also less likely to be increasing their purchases of "green" products.

"Obviously cost explains the reduction in the purchase of green products, but my guess is that recycling and related environmental issues are still important to consumers and those are things they can control," she added. "While they can't pay right now, they can still do their part."

Advice for Manufacturers

One component of the HealthFocus report that will surely be of interest to manufacturers was the proportion of consumers who admitted they were not loyal to brands when price was a factor.

"There were only 9% of people who said they don't plan to switch brands. Everybody to some degree thinks brand switching is important for saving money," said Ms. Katz. "The reality is that there are many consumers up for grabs."

Low prices can prove attractive to consumers, but she warned that while dropping the price is necessity borne out of a faltering economy, it is not a solid route to value creation, especially when it comes to health products. "Health is mainstreaming, and there are higher expectations around 'healthy foods' anyway-it's not just based on the economy. It's based on people's expectations of manufacturers to provide the whole ball of wax-functionality, plus taste, plus convenience," she said. "There is a longer term perspective of what people are looking for from a health and nutrition perspective and now there's this shorter term perspective of where people's needs are being overshadowed by this desperate economic need."

The reality, she added, is that health isn't something that falls off the grid. With the rising sales of staple foods, she said she's also seeing an uptick in food companies marketing the healthier aspects of their products. For example, the recent Chef Boyardee TV ad campaign touts a whole serving of vegetables.

"The value proposition around health and wellness is outside the trend for the necessity of lower pricing," she affirmed. "Whatever manufacturers can do to keep their eye on that will probably bode well coming out of this."

Because the economy continues to change rapidly, HealthFocus International plans to re-run and update this study. The updated report should be available in October.